Detailed Answer
1. Overview of Surplus Proceeds in Idaho Foreclosures
When a lender forecloses on real estate under Idaho Code §45-1506 and §45-1507, it must apply the sale proceeds first to costs of sale and the mortgage debt. Any remaining funds—the surplus proceeds—belong to the former owner, known as the mortgagor, or that person’s successors in interest.
Idaho Code §45-1506: Disposition of Sale Proceeds
Idaho Code §45-1507: Distribution of Surplus Moneys
2. Death of the Mortgagor and Effect on Eligibility
If the mortgagor (the property owner) dies before collecting the surplus, those funds become an asset of the decedent’s estate.
- If the decedent left a valid will, the personal representative named in that will must claim the surplus on behalf of the estate and distribute it under the terms of the will.
- If the decedent died without a will, the surplus passes according to Idaho’s intestate-succession rules found in Idaho Code §15-2-101: Intestate Succession.
3. How Idaho Intestacy Rules Apply
Under Idaho Code §15-2-101, if no will exists, the surviving spouse generally inherits:
- The entire estate if there are no surviving children or descendants.
- A statutory allowance (currently the first $100,000 of value) plus one-half of the remaining estate if surviving children or descendants exist.
Any remaining share passes to the decedent’s children or other heirs according to the statute.
4. Filing a Claim for Surplus Proceeds
The person entitled to the surplus—whether the personal representative, surviving spouse, or other heir—must file a petition in the district court where the foreclosure occurred. Idaho Code §45-1507 requires claims no later than one year after the sale date. Failure to claim within that period may forfeit the right to those funds.
5. Priority of Junior Lienholders
Junior lienholders (for example, second mortgages or judgment liens) may also assert a claim against surplus proceeds. Idaho Code §45-1507 gives them priority over the mortgagor for any unpaid junior lien balances, provided they file within the statutory deadline.
Helpful Hints
- Begin probate promptly: open the estate in district court to appoint a personal representative.
- Gather foreclosure documents: sale date, trustee’s deed, and proof of proceeds paid into court.
- Meet the one-year deadline: file your surplus-funds petition under Idaho Code §45-1507.
- Consult Idaho Code Title 15, Chapter 2 for intestacy details if no will exists.
- Consider hiring an attorney to handle probate and surplus-funds distribution to avoid procedural errors.